Author Archive
War of the Worlds: Librarians and Knowledge Managers Fight It Out
Posted by: | CommentsAbove and Beyond KM has an intriguing post up about the conflicts between knowledge management (”KM“) managers and librarians at law firms. The author muses that some of the conflict might be due to the caste system in the legal world, where lawyer KM managers look down their noses at “non-lawyer” librarians, and perhaps this struggle amounts to little more than the death throes of an obsolete system.
I think the caste system point is well taken. Interestingly, the caste system affects lawyer KM managers, too, as they usually have less status than many associates at a firm. The unspoken ideology seems to be that either you generate fees, or you do not, and, if not, then you have less status. Ultimately, the “death throes” issue really is at the fore here. Most of the issues I’ve found that librarians care passionately about in managing a collection simply do not overlap well with the daily knowledge acquisition and management needs of the firm. Consider:
- How often does a librarian spend extensive time cataloging material that is almost never used?
- To what degree are acquisitions focused on filling out a typical catalog versus aligning with KM needs?
- How strongly do librarians negotiate vendor contracts (in my experience, hardly at all)?
However, I will grant that KM managers may have blind spots as to certain important library needs. Ultimately, we need a more advanced system that takes into account all of these concerns.
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Star Contract
Posted by: | CommentsI love technology that plays around with words. There’s a terrific new beta site up now called Tagxedo that lets you take text and form it into a variety of colorful word clouds and shapes. I thought it would be fun to try this out with our most popular contract, the Sample Services Contract over at WhichDraft.com (you can review it here). Here’s what Tagxedo produced. Pretty snazzy, no?
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Six Sigma Software
Posted by: | CommentsAs some of you may know from reading this blog, I have a green belt in the Six Sigma process improvement method and am a big fan of its benefits. Recently Cary Harwin of Catalyst Development reached out to me about their new product, ChoiceAnalyst, which is a decision support tool for Six Sigma. You can find more about it here, and the pricing and support fees are listed here. There’s a personal edition that handles one decision maker, and a standard version that can handle up to five decision makers. Cary also plans on rolling out an enterprise version that will include collaboration features.
If you are not familiar with Six Sigma, here’s a quick primer. Six Sigma uses a rigorous, scientific approach to figuring out why a problem occurs when the cause is not obvious. The process requires you to define the problem, measure it, analyze your measurements, improve the process that was causing the problem to prevent it from happening, and control the process so that the problem’s causes don’t crop up again in the future.
Cary was kind enough to talk with us today and provide the following interview, which I think you’ll find useful in getting a better sense of whether decision tool software such as ChoiceAnalyst can be helpful to you.
Why did you develop ChoiceAnalyst?
“In sorting through decisions involving multiple criteria with many alternatives, people are becoming much more comfortable with using tools to assist in those kinds of decisions. People often struggle with how to interpret multiple criteria in making a decision, and ChoiceAnalyst makes this much easier by automatically weighting criteria based on your rankings, presenting each criteria as a choice, and allowing you to then make an informed decision. It’s very difficult for an individual to hold several different permutations in their head at the same time. We make that possible. The user still selects, judges, and chooses key criteria to make a decision, we just allow people to use a computer to juggle all of them and weight them mathematically so the user can decide what’s important in making a decision, and how much more important one issue is versus others.”
What would be an example of how ChoiceAnalyst can help in the legal arena?
“Wrongful discrimination lawsuits can be handled effectively by referring to documents that demonstrate a good faith basis for termination, such as written evaluations. If you can make this decision using a decision tool, you can understand what processes you need to put into place to define this kind of problem, measure the rankings of the most important causes of the problem, print out a pdf report showing you all of the scoring for all of the criteria, and then have that for analysis, improvement and control, you can fulfill a Six Sigma approach in properly managing your employees.”
Give us a specific example of how ChoiceAnalyst can help your clients?
“We remove buyer’s remorse. If a customer finds multiple products that meet their needs, how do they choose which one is the best? By calculating a result based on key criteria chosen by the customer, the customer can then ensure that it has made the best possible decision using a methodology that provides a sense of confidence that everything has been considered in arriving at the best choice.”
How can ChoiceAnalyst help with more effective contracting processes?
“We can help salespersons sort through the most important contract terms that cause problems for their customers, and properly draft a contract that best alleviates customer pain and allows them to make the decision to buy with the least amount of contract review and negotiation.”
Thanks, Cary.
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Is the Focus on Shareholder Value Hurting Law Firm Performance?
Posted by: | CommentsIntriguing post up today by Robert Sawhney, who asks here:
“[W]ho said that shareholder value was the primary objective of any firm? The well known and outspoken economist Milton Friedman was a vocal supporter of shareholder value as the primary objective of any firm. He claimed ‘the social responsibility of business is to increase profits’. That may be so and I am not here to argue the ins and outs of economics, but surely the objective of any business is to enhance client value and create economic value through innovation. Not only that, but economic value should be based on innovation and not destruction. Within the law firm environment and professional service firms in general, we are sorely lacking an alternative view of capitalism.”
I certainly agree with Robert that the leveraged law firm model is an entrenched system that does not do a very good job of creating economic value through innovation.
I would take issue with the comment regarding Milton Friedman, as I don’t think he would have ever said that creating value for customers through innovation is in opposition to shareholder value. Friedman’s core message was quite the opposite, mainly, that focusing on shareholder value pushes firms to compete to provide the best possible products at the most affordable prices, and they do this by innovating under competitive pressure. However, I think Robert does a strong job of pointing out how law firm path dependence creates a big problem for Friedman’s supposition, because law firms’ laser-like focus on profits per partner leads to poor, short term oriented decision making and worse allocations of resources which result in unnecessarily costly services that are often not provided with optimum performance.
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Strategic Sourcing Legal Services – Key Bullet Points
Posted by: | CommentsMany people within companies are looking for persuasive arguments as to why they should shift to alternative billing arrangements with outside counsel, particularly to radically reduce expense. Here are some of the key arguments that I find to be most persuasive:
- Too Much Legal Expense. Most companies are spending way too much on legal services. Moving away from the billable hour and turning towards alternative billing models focused on results creates a significantly better return on investment.
- Standard Procurement Fee Reduction Efforts Fail. Procurement departments routinely make the mistake of using a strategic sourcing manager without a strong understanding of the legal field, which makes their effort to cut outside counsel fees fail.
- Unique Nature of Legal Services. Legal services are a unique animal. In legal procurement, a strategic sourcing manager must dispense with the normal approach of treating a law firm as one company, as a law firm is not much more than a group of diverse people, each with a book of business, and the lawyers and staff that support each book.
- Use of Statistics. As a result, law firm wide statistics and quality management are often unhelpful and do not drive across the board quality improvement and spend reductions. You are much better off measuring the performance of the handful of lawyers who are controlled by the equity partner who manages your relationship.
- Year Over Year Fee Targets Don’t Work. You cannot set a target of year over year reductions in legal spending because the law department often has no idea, for any given year, what may materialize. A sudden class action lawsuit could be filed, a major construction vendor may walk off the job, or a sexual harassment lawsuit could result. Insisting that the law department spend less money than the previous year without taking this into account alienates the lawyers who are already reticent to support any kind of spend management.
- Compare Apples to Apples. The better approach is to compare apples to apples, and try to get year over year reductions in purchasing the same kind of legal service that was previously acquired, as well as looking into whether a particular legal service is needed in the first place.
- Where to Start? The best areas to target include M&A, labor and employment disputes, regulatory research, commercial real estate, and litigation amenable to alternative billing models that use clearly defined objectives and efficiency bonuses to drive results oriented, more efficient legal services at lower fees.
You can read more on these issues here and see all of my strategic sourcing posts here (scroll down).
Padding the Bill – The Leverage Issue
Posted by: | CommentsLeverage is the dominant business model at large law firms, where partners seek to leverage relatively low cost salaried associates against high hourly fees and hire as many associates as possible to maximize revenues. While this model has been battered in the recent recession, I have not seen any systematic change encouraging a fundamental shift away from leverage. The biggest problem with a leverage approach is your value is measured in the number of hours you bill, not the value you provide to your clients, resulting in an incentive to pad your bill.
There’s a nice debate going on right now on this subject within the Legal Innovation Group on Linked In, you can check it out here. Here’s my most recent comments on the issue, challenging the idea that it is not easy to change the current model (it is, but there is little incentive to do so) and the supposition that managing partners often have firm wide policing to prevent padding (they usually do not):
Gary, I would have to respectfully disagree as to this point “It is not easy or obvious how to accomplish this”. Law firms, being loose federations of individual businesses, each business consisting of an equity partner with a book of business and the willingness to walk away from the firm, would need to do the following:
1. Secure a commitment from each partner with a book of business to make the clients those of the firm.
2. Impose optimized processes using Lean/Six Sigma for doing all of their work and make sure that they are followed.
3. Use knowledge management and software automation to speed up document preparation.
Frankly, Patrick is right, without fixed fees there is little incentive to take these steps, and, in fact, a disincentive to do so. But it would be a straightforward process that is already widely performed in other fields, such as software development.
And:
Chris, I would recommend caution in referring to firms where certain behavior is allowed or isn’t, as I find that firms don’t do much of a job of policing behavior internally, and often times one partner will pad a bill while another partner at the very same firm would find that ethically abhorrent. Also, speaking from the in-house perspective, it really is one’s responsibility to question bills on a regular basis from larger law firms because of this lack of policing. At small firms I find this is less necessary, as you have much more of a chance of establishing a regular relationship and better billing expectations once you’ve removed leverage from the equation.
Hip Hop Economics Rap
Posted by: | CommentsThis is a fantastic, high production value, rap video about the Keynes vs. Hayek debate that defines the liberal vs. conservative current debate about the value of the stimulus. Terrific stuff.
Check it out here.
Unauthorized Practice of Law
Posted by: | CommentsHaving researched this a bit lately, I thought I’d pull together all of the links I discovered on ethics committees efforts to use the unauthorized practice of law strictures to shut down websites and publishers like LegalZoom, Nolo and TotalAttorneys. These disputes usually involve an overzealous ethics committee threatening or filing suit against a website or publisher for educating the public as to what transactional lawyers do for a living. Personally, I think clients are better off being well educated.
I do think the ethics committees make a few good points, though, namely:
- Websites and publishers shouldn’t hold themselves out as being the equivalent of a legal service from an attorney. Good legal service is at a much higher level than a template or form, and to contend that they are equivalent is simply wrong.
- Websites and publishers should not mislead customers into thinking that just because attorneys prepared general forms and templates, that means that they will work for the customer given his or her unique circumstances. That’s why you hire an attorney, to provide customized advice for your unique situation.
- Websites and publishers should provide a conspicuous disclaimer that they are not providing legal advice.
However, the ethics committees simply go too far, attempting to ban dissemination of any legal information. This is clearly an attempt to restrict free speech and is unconstitutional. I think that the private practice attorneys who generally make up these committees are probably motivated by two main concerns. First, to some degree, they are probably engaging in economic protectionism; worried that clients will be less willing to seek them out, they choose to simply shut down the competition. Second (probably to a much greater degree), they genuinely feel that everyone with contract needs should get the high quality service of an experienced transactional attorney.
However, this understandably admirable motivation is often dispensed with when it comes to making sure that attorneys are good at what they do (many are not, and continuing legal education requirements are minimal and do not push our service to a higher level). Additionally, we charge too much for many people to afford us, so the end result is that the ethics committees are shutting people completely out of access to any kind of legal information. I haven’t seen any good responses to this damning critique. I also think that the increasing inefficiency in legal services does not speak well to being cognizant of the omnipresent client need for less expensive billing.
I think the current sad state of affairs is due to the misconception that Internet resources should mostly be used without attorney input. This misconception is furthered on both sides of the debate, by website marketing campaigns, and attorneys trying to use the unauthorized practice of law restriction to shut websites down. I believe that websites should instead be encouraging users to engage attorneys, and attorneys should instead be taking advantage of these resources to enhance their productivity and pass those savings on to clients.
TotalAttorneys Being Sued for Violation of Legal Referral Rules
Connecticut Bar Attacks Non-Law Firm Legal Websites
Who Polices The Practice Police?
A Matter of Law: Texas vs. Nolo Press
Innovation and Rules of Professional Responsibility
